Question

4. The following data are available from the records of a company: (20)

Sales Rs. 60,000

Variable Cost Rs. 30,000

Fixed Cost Rs. 15,000

You are required to :

(a) Calculate the P/V Ratio, Break – Even Point and Margin of Safety at this level.

(b) Calculate the effect of 10% increase in the sale price.

(c) Calculate the effect of 10% decrease in the sale price​

Answer 1

(a)= profit volume ratio=sales-variable cost/ sales

60,000-30,000/60,000 multiply by 100 in it

= 50%

break even point= fixed cost/ profit volume ratio multiply by 100 in it.

15,000/ 50 multiply by 100

=30,000

margin of safety= total sale- break even point

60,000-30,000=30,000.

(b)= pvr= sales-variable cost/sales

so,

60,000/100 multiply by 10=6,000

then, 6,000+60,000=66000

then,66000-30,000=36,000

36,000/66,000= 600/11= 54.54%

break event point= fixed price/pvr

15,000/54.54% multiply by 100

= 27502.75

margin safety= total sale - Break event point

66000 - 27502.75

= 58497.25

C PART I DONT KNEW PLEASE ANYONE OTHER